View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Directory of Open Access Journals 1 Journal of Management and Science ISSN: 2249-1260 | e-ISSN: 2250-1819 | Vol.4. No.2 | June’2014 Betterment in Customer Service Indicating Improvement in Work Culture-A Case Study of United Bank of India (UBI) Dr. Arunava Narayan Mukherjee Associate Professor in HRM Globsyn Business School – National Campus Globsyn Knowledge Foundation XI-11 & 12, Block EP.Sector-V, Salt Lake Electronics Complex, Kolkata-700091. India. ABSTRACT: With the initiation of the process of liberalization and reform of the financial sector, banking in India has undergone significant changes. The banking sector had to adapt rapid and radical changes. The environment became more challenging for Public Sector Banks as a good number of them survived merely by the grace of state protectionism and were administered in extremely inefficient manner which caused them to go to bankruptcies quite often. The employees of these banks with secured employment under the shield of all powerful unions were blissfully indifferent towards quality of performance particularly customer service and profitability of the bank. In face of the increasing competition where banking industry as a whole was striving to achieve greater efficiencies in their day-to-day operations, some of the Public Sector Banks actually confronted with existential crisis. The Public Sector bank under study - United Bank of India (UBI) was declared by 1999 as the one among ― the weakest in all the banks‘‘ by the Verma Committee set up by Reserve Bank of India. There was an urgent need for UBI to transform itself for bare survival and to meet the shifting requirements of the new turbulent environment. This case study narrates the transformation of UBI from one of ― the weakest in all the banks ‘‘ of India to a successful Public Sector Bank capable of providing better customer service which undoubtedly signifies improvement in the bank‘s work culture. Keywords: United Bank of India (UBI), Customer Service, Work Culture Introduction: United Bank of India is one of the 14 banks which were nationalised on July 19, 1969. On October 12, 1950, the name of Bengal Central Bank Limited (established in 1918 as Bengal Central Loan Company Limited) was changed to United Bank of India Limited for the purpose of amalgamation and on December 18, 1950, Comilla Banking Corporation Limited (established in 1914), the Comilla Union Bank Limited (established in 1922), the Hooghly Bank (established 1932) stood amalgamated with the Bank. Subsequently, other banks namely, Cuttack Bank Limited, Tezpur Industrial Bank Limited, Hindusthan Mercantile Bank Limited and Narang 2 Journal of Management and Science ISSN: 2249-1260 | e-ISSN: 2250-1819 | Vol.4. No.2 | June’2014 Bank of India Limited were merged with the Bank. The Bank is currently wholly-owned by the Government of India with branches in 28 States and in 4 Union Territories in India.1 The business of the bank is principally divided into retail banking, corporate / wholesale banking, priority sector banking, treasury operations and other banking services such as agency functions for insurance and mutual fund distribution, pension and tax collection services. Background of the Study: By the beginning of 1990s, it was realised by the government that the efficiency of the nationalized banks was not to be measured only by quantitative growth in terms of branch expansion and growth in deposits/advances. The financial strength and operational efficiency of the Indian banks and financial institutions which were working in a highly protected and regulated environment were not measuring up to international standards. The global and domestic developments called for corrections primarily with a view to strengthening the financial system and to bring it on par with institutions abroad. Hence, from 1992, a process of financial sector reforms, as a part of a broader programme of structured economic reforms was set in motion. Till adoption of the prudential norms, twenty-six out of twenty-seven public sector banks were reporting profits. In the first post-reform year, i.e., 1992-93, the profitability of PSBs as a group turned negative with as many as twelve nationalised banks reporting net losses. The emphasis on maintenance of capital adequacy and compliance with the requirement of asset classification and provisioning norms has put severe pressure on the profitability of PSBs. The response of the public sector banks to the above changes has been varied. While some have withstood all these pressures, for most, the shocks have been severe, at least, initially. The profitability of the public sector banks as a group remained negative in 1993-94. However, there have been improvements since 1994-95.2 There were certain nationalised banks which have failed to respond to the changes and have displayed weaknesses that have remained uncontrolled. It was felt that the seeds of weakness latent in these banks were not receiving attention. The issue needed to be addressed squarely so that they do not, in the long run, pose a threat to the whole system. 1Red Herring Prospectus, Dated February 16, 2010, Page-39 , http://www.sebi.gov.in/dp/ubipros.pdf 2http://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=60 3 Journal of Management and Science ISSN: 2249-1260 | e-ISSN: 2250-1819 | Vol.4. No.2 | June’2014 Determination of the Drawback: The Reserve Bank of India set up the Verma Committee to identify and examine the problems of weak banks The most important issue before the Working Group has, been to identify the factors responsible for the emergent weaknesses. The Working Group was to recognise early distress signals so that urgent steps to control and eliminate the underlying causes of the distress could be taken. On the basis of the Criteria set by the Committee to identify weakness, the Committee found United Bank of India is one of the weakest in all the 27 public sector banks ranked. In March 1999 The RBI working group in its report identified the poor customer service provided by the bank as one of the primary reasons of its weakness. In fact, according to the committee this constituted one of the salient features of the work culture of the bank during that period. They working group explained the phenomena in the following manner: ―Customer service in these banks is perceived to be as of poor quality. This is due to a weak administration and as discussed below, lack of IT orientation in their operations. Partly because of this and the non-competitive rates offered by these banks, remunerative clients are severing or restricting relationship and new such clients are not coming. This is a vicious circle that these banks seem unable to break with their existing systems and work culture‖ The situation was quite alarming for the bank. The bank management had to take serious note of the dismal condition of its customer service. By this time the financial reforms initiated in the early 90s and the globalisation and liberalisation measures brought in a completely new operating environment to the Bank which was till then operating in a highly protected milieu. The arrival of foreign Banks and Financial Institutions, the setting up of a number of private banks and the measures of de-regulation that encouraged competition has led to a situation where the survival of those who do not join the race will become difficult. Unless the state-of- the-art IT was introduced as early as possible, winning new business and even holding on to the old one will become quite impossible. Services and products like "Anywhere Banking", "Tele-Banking", "Internet banking", ―e-banking‖ ‖Online Banking‖ "Web Banking", e-commerce, e-business etc. have become the buzzwords of the day. Concomitantly, the importance of effective MIS for control of operations and of maintaining customer and business/industry data bases for strategic planning had also surfaced; while Indian Banks were looking at Data warehousing, Data mining, Business Restructuring etc. as task to be accomplished as early as possible, they were taking steps on urgent basis to computerise the operations in their administrative and controlling offices (viz. head /zonal/regional offices) as well as the data collection machinery, so as to evolve an effective MIS. The contemporary new communication revolution sweeping the nation and the world facilitated this transformation in banking sector. 4 Journal of Management and Science ISSN: 2249-1260 | e-ISSN: 2250-1819 | Vol.4. No.2 | June’2014 Remedial Measures: The management of United Bank of India was pragmatic enough to realise the changing environment. Therefore the Bank evolved out strategies to cope with the competition by offering innovative and attractively packaged technology-based services to their customers. The bank gradually started offering a wide range of general banking services to its customers including debit cards, cash management, remittance services and collection services. The banks also distribute third party products such as life and non-life insurance policies and mutual funds on an agency basis. In addition, the bank acted as an agent for various state governments and the Government of India on numerous matters including the collection of taxes and payment of salary and pension. The bank delivers products and services through its branches, extension counters, ATMs, internet banking and telebanking. A few significant achievements of UBI in the area of customers service specially IT enabled services is discussed hereunder. 'United Online' internet banking service of United Bank of India is a latest value added service introduced for our account holder. It provides an array of services such as: 1. Query Mode: a) Account view. b) Cheque Inquiry Status c) Statement of account. 2. Fund Transfer Mode: a.